Indiana law is fairly well developed with respect to the interpretation and enforcement of noncompetition agreements in the employment context. As noted in previous posts [dkblegal.com/new-blog], Indiana courts view noncompete agreements as a restraint on trade but will enforce them if they are reasonable and necessary to protect an employer’s legitimate business interest. On the other hand, restrictive covenants pertaining to the solicitation of employees have not yet received the same degree of judicial attention. Still, the Indiana Court of Appeals has provided some guidance.
In Enhanced Network Solutions Group, Inc. v. Hypersonic Technologies, Inc., the Indiana Court of Appeals concluded that no breach of a non-solicitation agreement occurs where the prospective employee initiates contact and the party bound by the restrictive covenant merely provides requested information, interviews the applicant and ultimately makes an employment offer.
In that case, Enhanced Network Solutions (“ENS”), which was in the business of modifying existing software to meet its clients’ needs, and Hypersonic, a Fort Wayne-based software engineering firm, entered into an agreement containing a non-solicitation provision, which reads (in pertinent part): "During the term of this Agreement and for a period of twelve (12) months from the date of effective date of its termination, unless mutually agreed to in writing otherwise the Parties (including any successor-in-interest or related company) shall refrain from soliciting, inducing, or attempting to solicit or induce, any employee of the other Party in any manner that may be reasonably expected to bring about the termination of said employee."
The parties ultimately terminated their agreement; however, before the relationship ended, Hypersonic posted an opening for an outside sales representative on LinkedIn. Following the termination of the parties’ agreement, Robert Dobson, an employee of ENS, contacted Hypersonic regarding the opening. Shortly thereafter, Hypersonic’s owner and president had a lunch meeting with Mr. Dobson, during which they responded to Mr. Dobson’s requests for information about the open position but did not make an offer at that time. Mr. Dobson continued his dialogue with Hypersonic, applied for the position and received an offer. After hiring Mr. Dobson, Hypersonic filed a declaratory judgment action, asking court to interpret the enforceability of the non-solicitation provision. The trial court issued an order declaring that “Hypersonic did not solicit, induce or attempt to solicit or induce Dobson to terminate his employment with ENS.”
On appeal, the court began its analysis by noting that the agreement contained no definition for the terms “solicit” and “induce.” The court further noted that there was no case law discussing the precise meaning of these terms. Accordingly, the court turned to Black’s Law Dictionary, which defines “solicitation” as the “act or an instance of requesting or seeking to obtain something; a request or petition,” and which defines “inducement” as “the act or process of enticing or persuading another person to take a certain course of action.”
Applying these definitions, the court concluded that Hypersonic had not solicited or induced Mr. Dobson to leave ENS. On the contrary, the court concluded that, by initiating contact with Hypersonic, requesting information and applying for an open position, Mr. Dobson had actually solicited Hypersonic. More importantly, Hypersonic’s conduct, providing requested information and ultimately offering employment, did not constitute solicitation or inducement.
If you would like more information about non-solicitation agreements in Indiana or would like more information about the business and employment legal services we offer, please contact Dan Burke at 317.709.4242, or firstname.lastname@example.org.